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HomeMy WebLinkAboutAgenda - 12-20-94 - Lease LEASE by and between ORANGE COUNTY, NORTH CAROLINA AS LESSOR and THE CHAPEL HILL-CARRBORO CITY BOARD OF EDUCATION AS LESSEE Dated as of January _, 1995 Prepared by and return after recording to: BWNY/133845.2/15880/00013/1537 December 14, 1994 LEASE THIS LEASE, dated as of January _, 1995, and entered into by and between the County of Orange, North Carolina, a political subdivision of the State of North Carolina, as lessor (the "County") , and The Chapel Hill-Carrboro City Board of Education, a body corporate which has general control and supervision of all matters pertaining to the public schools in the Chapel Hill- Carrboro City Schools, its respective school administrative unit, and is duly organized and existing under the laws of the State of North Carolina, as lessee (the "Board of Education") , W I T N E S S E T H: WHEREAS, the County and the Board of Education have previously determined to cooperate in a plan for the acquisition, construction, equipping and financing of a project which each has found to be necessary and desirable to provide for improved public school facilities and improved public education in the County; and WHEREAS, such project consists of a new elementary school for use by the Chapel Hill-Carrboro City Schools, including parking areas, sidewalks and other appurtenant facilities, landscaping and other related site work (such school and other facilities and improvements being herein collectively called the "Improvements") , on a site adjacent to the site of McDougle Middle School as more particularly described in Exhibit A hereto (the "Site") ; and WHEREAS, as a part of such plan, the Board of Education has executed a General Warranty Deed, made the day of January 1995, conveying the Site to the County; and WHEREAS, as a part of such plan, the County has entered into an Installment Purchase Contract, dated as of January , 1995, between the County and NationsBank of North Carolina, N.A. , and providing for the financing of the acquisition, construction and equipping of the Improvements (the "Installment Purchase Contract") , a copy of which is attached hereto as Exhibit B; and WHEREAS, as a part of such plan, the County and the Board of Education have entered into an Agreement Concerning the Acquisition, Construction and Equipping of Improvements for the Chapel Hill-Carrboro City Schools, dated as of January _, 1995, providing, among other matters, for the acquisition, construction and equipping of the Improvements (the "Agreement") ; and BWNY/133845.2/15880/00013/1537 December 14, 1994 WHEREAS, as a part of such plan, the County proposes to lease the Leased Property, as hereinafter defined, to the Board of Education and the Board of Education has determined to lease the Leased Property from the County; NOW, THEREFORE, for and in consideration of the mutual promises and covenants herein contained, the parties hereto agree as follows: ARTICLE I DEFINITIONS; RULE OF CONSTRUCTION All capitalized terms used in this Lease and not otherwise defined herein shall have the meanings assigned to them in the Installment Purchase Contract, unless the context clearly requires otherwise. In addition, the following terms will have the meanings specified below, unless the context clearly requires otherwise: "Board of Education Representative" means any person at the time designated, by a written certificate furnished to the County and signed on the Board of Education's behalf by its Chairman, to act on the Board of Education's behalf for the purpose of performing any act under this Lease. "Closing Date" means the date on which the Installment Purchase Contract takes effect, which date is on or about January , 1995. "County Representative" means any person at the time designated, by a written certificate furnished to the Board of Education and signed on the County's behalf by the Chairman of its Board of Commissioners, to act on the County's behalf for the purpose of performing any act under this Lease. "Event of Default" means one or more events of default as defined in Section 12 . 1. "Lease" means this Lease, as it may be duly amended. "Lease Term" means the term of this Lease as determined pursuant to Article IV. "Lease Year" means, initially, from the Closing Date through December 31, 1995, and, thereafter, means the twelve (12) -month period of each year commencing on January 1 and ending on the next December 31. BWNY/133845.2/15880/00013/1537 December 14, 1994 2 "Leased Property" means the Improvements and the Site collectively. All references to articles or sections are references to articles or sections of this Lease, unless the context clearly indicates otherwise. ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES The County and the Board of Education each represent, covenant and warrant for the other's benefit as follows: (1) Neither the execution and delivery of this Lease, nor the fulfillment of or compliance with its terms and conditions, nor the consummation of the transactions contemplated hereby, results or will result in a breach of the terms, conditions and provisions of any agreement or instrument to which either is now a party or by which either is bound, or constitutes a default under any of the foregoing. (2) To the knowledge of each party, there is no litigation or proceeding pending or threatened against such party (or against any other person) affecting the rights of such party to execute or deliver this Lease or to comply with its obligations under this Lease. Neither the execution and delivery of this Lease by such party, nor compliance by such party with its obligations under this Lease, requires the approval of any regulatory body or any other entity the approval of which has not been obtained. ARTICLE III DEMISING CLAUSE The County hereby leases the Leased Property to the Board of Education and the Board of Education hereby leases the Leased Property from the County, in accordance with the provisions of this Lease, to have and to hold for the Lease Term. Notwithstanding anything in this Lease to the contrary, the Board of Education's rights to possession of the Leased Property, its rights to purchase the Leased Property pursuant to Section 5. 2, and all of its other rights under this Lease are subordinate to the rights of NationsBank of North Carolina, N.A. , the beneficiary under the Deed of Trust and Security Agreement, dated as of January _, 1995, from the County to , Trustee, and its successors and assigns, and relating to the Leased Property BWNY/133845.2/15880/00013/1537 December 14, 1994 3 (the "Deed of Trust") . Any judicial sale of, or foreclosure on, the Leased Property pursuant to the Deed of Trust shall terminate all the Board of Education's rights hereunder. ARTICLE IV LEASE TERM 4. 1 Commencement. The Lease Term shall commence on the Closing Date. 4.2 Termination. The Lease Term shall terminate upon the earlier of either of the following events: (a) the termination of the Installment Purchase Contract; or (b) an Event of Default and termination by the County pursuant to Article XII. Termination of the Lease Term shall terminate the County's obligations under this Lease and the Board of Education's rights of possession under this Lease, but all other provisions of this Lease, including those relating to the receipt and disbursement of funds, shall be continuing until the Installment Purchase Contract is discharged as provided therein. ARTICLE V QUIET ENJOYMENT; PURCHASE OPTION 5. 1 Quiet Enjoyment. The County hereby covenants that the Board of Education shall, during the Lease Term, peaceably and quietly have and hold and enjoy the Leased Property without suit, trouble or hindrance from the County, except as expressly required or permitted by this Lease. The County shall not interfere with the quiet use and enjoyment of the Leased Property during the Lease Term. The County shall, at the Board of Education's request and the County's cost, join and cooperate fully in any legal action in which the Board of Education asserts its right to such possession and enjoyment, or which involves the imposition of any taxes or other governmental charges on or in connection with the Leased Property. In addition, the Board of Education may at its own expense join in any legal action affecting its possession and enjoyment of the Leased Property, and shall be joined (to the extent legally possible, and at the Board of Education's expense) in any action affecting its liabilities hereunder. BWNY/133845.2115880/00013/1537 December 14, 1994 4 The provisions of this Article shall be subject to rights to inspect the Leased Property granted to parties under the Installment Purchase Contract and to the right hereby reserved to the County to inspect the Leased Property at any reasonable time. 5. 2 Purchase Option. The Board of Education shall have the option to purchase the Leased Property, in whole but not in part, at the end of the Lease Term upon payment by the County of all of the Installment Payments and upon payment to the County of a purchase option price of $100. The Board of Education shall notify the County of its exercising of this option within fifteen (15) days after the end of the Lease Term, and within forty-five (45) days thereafter the County shall execute and deliver all necessary documents conveying to the Board of Education good and marketable title to the Leased Property, subject only to (a) Permitted Encumbrances and (b) any encumbrance or imperfection caused by or attributable to the Board of Education. ARTICLE VI CONSIDERATION FOR LEASE 6 . 1 Use as School; Assumption of Obligations. In partial consideration for its acquisition of rights to use the Leased Property during the Lease Term and its option to purchase the Leased Property, the Board of Education hereby agrees to use the Leased Property for public school purposes in fulfillment of its obligation, shared by the County, to provide for elementary and secondary education in the County. In addition, in consideration of its rights under this Lease, the Board of Education undertakes the obligations imposed on it hereunder, including those imposed by Section 8. 1. 6. 2 Payments. In partial consideration for its acquisition of rights to use the Leased Property during the Lease Term and its option to purchase the Leased Property, the Board of Education hereby agrees to pay to the County annual rent in the amount of $100 payable in advance on the Closing Date (receipt of which is hereby acknowledged) and on the first day of each Lease Year thereafter. The County and the Board of Education acknowledge their understanding that, although the County's financing of the Leased Property and providing of the Leased Property to the Board of Education for its use, is of substantial value to the Board of Education, any payment by the Board of Education of a market value rent would represent simply an accounting transaction, because the Board of Education's funding for such purpose would be primarily provided through the County. BWNY/133845.2/15880/00013/1537 December 14, 1994 5 ARTICLE VII ACQUISITION, CONSTRUCTION AND EQUIPPING OF IMPROVEMENTS The County has provided in the Agreement for the acquisition, construction and equipping of the Improvements by the Board of Education as the County's agent. The Board of Education represents that it has reviewed all provisions concerning the acquisition, construction and equipping of the Improvements in the Installment Purchase Contract and hereby approves such provisions. The Board of Education shall take possession of the Improvements upon completion thereof. Title to the Improvements and the remainder of the Leased Property shall be held by the County, subject only to Permitted Encumbrances and any other encumbrances pursuant to or in accordance with the Installment Purchase Contract, the Deed of Trust or this Lease. ARTICLE VIII BOARD OF EDUCATION'S ASSUMPTION OF COUNTY'S OBLIGATIONS 8 . 1 Assumption of Obligations. The Board of Education hereby assumes all the County's obligations under the Installment Purchase Contract regarding care, use and operation of the Leased Property, payment of taxes, utilities and other governmental charges, maintenance of insurance coverage, prevention of liens, and repair or replacement of the Leased Property; provided, however, that the County hereby undertakes to make any insurance proceeds contemplated by the Installment Purchase Contract available to the Board of Education for use in carrying out this obligation and, further, that the County retains its rights to direct the use of such insurance proceeds to prepayment of the County's obligations under the Installment Purchase Contract. It is expressly understood that the Board of Education shall not assume the County's obligation under the Installment Purchase Contract to pay the Installment Payments and that the Board. of Education shall not indemnify the County or any other party to the Installment Purchase Contract for third-party claims asserted against any party to the Installment Purchase Contract relating to the payment of the Installment Payments. 8 . 2 Transfer of Rights. In order to allow the Board of Education to carry out the County's obligations under the Installment Purchase Contract to be assumed by the Board of Education, the County hereby transfers its rights under the Installment Purchase Contract regarding such obligations to the Board of Education. Nothing in this Section, however, shall be BWNY/133845.2/15880/00013/1537 December 14, 1994 6 construed as in any way delegating to the Board of Education any of the County's rights or responsibilities to make decisions regarding the Board of Education's capital and operating budgets or otherwise covenanting that funds for such purposes will be appropriated or available. 8. 3 Board of Education's General Covenant. The Board of Education further undertakes not to take or omit to take any action the taking or omission of which would cause the County to be in default in any manner under the Installment Purchase Contract. In particular, the Board of Education covenants not to make any use of the Leased Property that would cause the County's obligations to make Installment Payments under the Installment Purchase Contract to be "private activity bonds" within the meaning of the Internal Revenue Code of 1986, as amended. If the Board of Education shall take or omit to take any such action, then the Board of Education shall proceed with all due diligence to take such action as may necessary to cure such default. 8 . 4 County's Cooperation. The County shall cooperate fully with the Board of Education in filing any proof of loss or taking any other action under this Lease. In no event shall the County or the Board of Education voluntarily settle, or consent to the , settlement of, any proceeding arising out of any insurance claim with respect to the Improvements without the other's written consent. 8. 5 Advances; Performance of Obligations. If the Board of Education shall fail to pay any amount required to be paid by it under this Lease, or fails to take any other action required of it under this Lease, then the County may (but shall be under no obligation to) pay such amount or perform such other obligation. The Board of Education agrees to reimburse the County for any such payment or for its costs incurred in connection with performing such other obligation. ARTICLE IX DISCLAIMER OF WARRANTIES; OTHER COVENANTS 9. 1- Disclaimer of Warranties. THE COUNTY MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR FITNESS FOR A PARTICULAR USE OF THE LEASED PROPERTY OR ANY PART THEREOF OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE LEASED PROPERTY OR ANY PART THEREOF. In no event shall the County be liable for any direct or indirect, incidental, special or consequential damage in connection with or arising out BWNY/133845.2/15880/00013/1537 December 14, 1994 7 of this Lease or the existence, furnishing, functioning or use by anyone of any item, product or service provided for herein. 9 . 2 Further Assurances; Corrective Instruments. The Board of Education and the County agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Leased Property hereby leased or intended so to be, or for otherwise carrying out the intention hereof. 9 . 3 Board of Education and County Representatives. Whenever under the provisions hereof the approval of the Board of Education or the County is required to take some action at the request of the other, unless otherwise provided, such approval or such request shall be given for the Board of Education by the Board of Education Representative and for the County by the County Representative, and the Board of Education and the County shall be authorized to act on any such approval or request of such representative of the other. 9 .4 Compliance with Requirements. During the Lease Term, the Board of Education and the County shall observe and comply promptly with all current and future orders of all courts having jurisdiction over the Improvements or any portion thereof (or be diligently and in good faith contesting such orders) , and all current and future requirements of all insurance companies' written policies covering the Improvements or any portion thereof. ARTICLE X TITLE TO LEASED PROPERTY; LIMITATIONS ON ENCUMBRANCES 10. 1 Title to Leased Property. Except for personal property purchased by the Board of Education at its own expense, title to the Leased Property and any and all additions and modifications to or replacements of any portion of the Leased Property shall be held in the County's name, subject only to Permitted Encumbrances, until foreclosed upon or conveyed as provided in the Lease, notwithstanding (a) the occurrence of one or more events of default as defined in Section 10. 1 of the Installment Purchase Contract; (b) the occurrence of any event of damage, destruction, condemnation or construction or title defect; or (c) the violation by the County of any provision of this Lease. The Board of Education shall have no right, title or interest in the Leased Property or any additions and modifications to or BWNY/133845.2/15880/00013/1537 December 14, 1994 8 replacements of any portion of the Leased Property, except as expressly set forth in this Lease. ARTICLE XI ASSIGNMENT, SUBLEASING AND INDEMNIFICATION 11. 1 Board of Education's Assignment and Subleasing. The Board of Education may not assign or sublease the Leased Property, in whole or in part, without the consent of the County. 11.2 Indemnification. Except as provided in Section 8. 1, to the extent permitted by law, the Board of Education shall and hereby agrees to indemnify and save the County harmless against and from all claims by or on behalf of any person, firm, corporation or other legal entity arising from the operation or management of the Leased Property by the Board of Education during the Lease Term, including any arising from: (a) any condition of the Leased Property or (b) any act of negligence of the Board of Education or of any of its agents, contractors or employees or any violation of law by the Board of Education or breach of any covenant or warranty by the Board of Education hereunder. The Board of Education shall be notified promptly by the County of any action or proceeding brought in connection with any claims arising out of circumstances described in (a) or (b) above. ARTICLE XII EVENTS OF DEFAULT 12 . 1 Events of Default. Each of the following shall be an "Event of Default" under this Lease and term "Default" shall mean, whenever it is used in this Lease, any one or more of the following events: (a) The Board of Education's failure to make any payments hereunder when due. (b) The Board of Education's failure to observe and perform any covenant, condition or agreement on its part to be observed or performed for a period of thirty (30) days after written notice specifying such failure and requesting that it be remedied shall have been given to the Board of Education by the County, unless the County shall agree in writing to an extension of such time prior to its expiration; provided, however, that if the failure stated in such notice cannot be corrected within the applicable period, the County shall not unreasonably withhold its consent to an extension of such time BWNY/133845.2/15880/0001311537 December 14, 1994 9 if corrective action is instituted by the Board of Education within the applicable period and diligently pursued until such failure is corrected and, further, that if by reason of any event or occurrence constituting force majeure the Board of Education is unable in whole or in part to carry out any of its agreements contained herein (other than its obligations contained in sections 6.2 or 8. 1) , the Board of Education shall not be deemed in default during the continuance of such event or occurrence. (c) The dissolution or liquidation of the Board of Education or the voluntary initiation by the Board of Education of any proceeding under any federal or state law relating to bankruptcy, insolvency, arrangement, reorganization, readjustment of debt or any other form of debtor relief, or the initiation against the Board of Education of any such proceeding which shall remain undismissed for sixty (60) days,. or the entry by the Board of Education into an agreement of composition with creditors or the Board of Education's failure generally to pay its debts as they become due. 12 . 2 Remedies on Default. Whenever any Event of Default shall have happened and be continuing, the County may take one or any combination of the following remedial steps: (a) Terminate this Lease, evict the Board of Education from the Leased Property or any portion thereof and re-lease the Leased Property or any portion thereof. (b) Have reasonable access to and inspect, examine and make copies of the Board of Education's books and records and accounts during the Board of Education's regular business hours, if reasonably necessary in the County's opinion. (c) Take whatever action at law or in equity may appear necessary or desirable, including the appointment of a receiver, to collect the amounts then due, or to enforce performance and observance of any obligation, agreement or covenant of the Board of Education under this Lease. Any amount collected pursuant to action taken under this Section shall be applied in accordance with the Installment Purchase Contract. 12 . 3 No Remedy Exclusive. No remedy herein conferred upon or reserved to the County is intended to be exclusive, and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder and every remedy now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or BWNY/133845.2/15880/00013/1537 December 14, 1994 10 power, and any such right and power may be exercised from time to time as may be deemed expedient. In order to entitle the County to exercise any remedy reserved in this Article XII, it shall not be necessary to give any notice, other than such notice as may be required in this Article XII. 12 . 4 Waivers. If any agreement contained herein should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder. A waiver of an event of default under the Installment Purchase Contract shall constitute a waiver of any corresponding Event of Default under this Lease; provided that no such waiver shall extend to or affect any subsequent or other Event of Default under this Lease or impair any right consequent thereon. 12 .5 Waiver of Appraisement, Valuation, Stay Extension and Redemption Laws. The Board of Education and County agree, to the extent permitted by law, that in the case of a termination of the Lease Term by reason of an Event of Default, neither the Board of Education nor the County nor any one claiming through or under either of them shall or will set up, claim or seek to take advantage of any appraisement, valuation, stay, extension or redemption laws now or hereafter in force in order to prevent or hinder the enforcement of the Installment Purchase Contract or of • any remedy provided hereunder or thereunder; and the Board of Education and the County, for themselves and all who may at any time claim through or under either of them, each hereby waives, to the full extent that it may lawfully do so, the benefit of such laws. ARTICLE XIII MISCELLANEOUS 13 . 1 Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when delivered or mailed by registered mail, postage prepaid, addressed as follows: (a) If intended for the County, addressed to it at the following address: Orange County Attention: Finance Director 208 South Cameron Street Hillsborough, NC 27278 BWNY/133845.2/15880/00013/1537 December 14, 1994 11 (b) If intended for the Board of Education, addressed to it at the following address: The Chapel Hill-Carrboro City Attention: Superintendent Board of Education Lincoln Center Merritt Mill Road Chapel Hill, NC 27516 13 . 2 Binding. Effect. This Lease shall be binding upon and inure to the benefit of the Board of Education and the County, subject however to the limitations contained in Article XI. 13 . 3 Net Lease. This Lease shall be deemed and construed to be a "net lease, " and the Board of Education shall pay absolutely net during the Lease Term all other payments required hereunder, free of any deductions, and without abatement or setoff. 13 . 4 Payments Due on Holidays. If the date for making any - payment or the last day for performance of any act or the exercising of any right, as provided in this Lease, shall not be a business day, such payment may be made or act performed or right exercised on the next preceding day that is a business day with the same force and effect as if done on the nominal date provided in this Lease. 13 . 5 Severability. In the event that any provision of this Lease, other than the requirement of the County to provide quiet enjoyment of the Leased Property, shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. 13 . 6 Execution in Counterparts. This Lease may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 13 . 7 Applicable Law. This Lease shall be governed by and construed in accordance with the laws of the State of North Carolina. 13 . 8 Captions. The captions or headings herein are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Lease. BWNY/133845.2/15880/00013/1537 December 14, 1994 12 13 .9 Memorandum of Lease,. At the request of either party, the County and the Board of Education shall, on or before the Closing Date, execute a memorandum of this Lease legally sufficient to comply with the relevant provisions of the North Carolina General Statutes. IN WITNESS WHEREOF, the parties hereto have caused this Lease to be executed in their corporate names by their duly authorized officers, all as of the day and year first above written. ORANGE COUNTY, NORTH CAROLINA By: [Seal] Moses Carey, Jr. , Chairman of the Board of Commissioners Attest: Beverly L. Blythe, Clerk to the Board of Commissioners THE CHAPEL HILL-CARRBORO CITY BOARD OF EDUCATION [Seal] By: Kenneth B. Touw, Chair Attest: Neil G. Pedersen, Secretary BWNY/133845.2/15880/00013/1537 December 14, 1994 13 STATE OF NORTH CAROLINA ) COUNTY OF ORANGE ) I, a Notary Public of the County and State aforesaid, certify that BEVERLY L. BLYTHE personally came before me this day and acknowledged that she is Clerk to the Board of Commissioners for Orange County and that by authority duly given and as the act of said County, the foregoing instrument was signed in its name by the Chairman of said Board of Commissioners and attested by her as Clerk to said Board of Commissioners. Witness my hand and official stamp or seal, this the day of January 1995 . NOTARY PUBLIC My Commission Expires: STATE OF NORTH CAROLINA ) COUNTY OF ORANGE I, a Notary Public of the County and State aforesaid, certify that Neil G. Pedersen personally came before me this day and acknowledged that he is Secretary of The Chapel Hill-Carrboro City Board of Education and that by authority duly given and as the act of said Board of Education, the foregoing instrument was signed in its name by the Chair of said Board of Education and attested by him as Secretary of said Board of Education. Witness my hand and official stamp or seal, this the day of January 1995. NOTARY PUBLIC My Commission Expires: BWNY/133845.2/15880/00013/1537 December 14, 1994 14 EXHIBIT A LEGAL DESCRIPTION OF SITE [To be provided. ] BWNY/133845.2/15880/00013/1537 December 14, 1994 EXHIBIT B [Copy of Installment Purchase Contract to be attached. ] BWNY/133845.2/15880/00013/1537 December 14, 1994